67. Telegram From the Mission at the European Communities to the Department of State0
Ecbus 100. For Under Secretary Dillon and Deputy Under Secretary Merchant. Info Tuthill RA. During last several days I have had conversations with President Hallstein and key EEC commissioners, following their special two-day session to review upcoming problems, especially external relations with Europe and rest of world. Leadership in commission, subsequent to that special session, is seeking community posture in its external relations which will preserve undiluted the movement of the Six toward economic union and eventual political federation, while meeting legitimate trade concerns of British and others.
I understand that commission plans propose that community official make statement shortly after Council of Ministers meetings September 11 to effect that time is not ripe for negotiation possible European Economic Association, but that community would be prepared propose joint committee with Seven to consider ways and means of resolving specific trade problems which might arise.
Consistent with its strong desire orient its external relations toward free world as a whole rather than toward OS, leadership in commission also seeking establish following policies: (a) unilateral extension to all countries of expansion in industrial quotas scheduled for January 1, 1960, as a step toward their ultimate elimination; (b) similar unilateral extension to all MFN countries of internal tariff reductions scheduled for July 1, 1960, provided such reductions not below eventual level common external tariff; (c) announcement of community’s willingness to [Page 146] negotiate on a basis of reciprocity reductions of 20 percent in common external tariff either incorporating results of upcoming GATT negotiations [or?] as first round supplement thereto.
Above-described free world approach to external relations based in great part on estimation that the changed world economic situation (such as disappearance of dollar gap problem) no longer permits, much less makes desirable, coalescence in Europe of new tariff preferential area lacking positive political advantages of Six. However, above-described approach to external relations subject to variety strong external and internal pressures to initiate conversations quickly for association of OS with Six.
I fear that to extent US appears accept OS even tacitly (for example, Deptels 1844 and 2046 to London),1 commission endeavor to keep common market relations orientated toward entire free world will be jeopardized. Commission sincerely believes OS contrary even liberal interpretation GATT Article XXIV, but convinced that OS will be able round up sufficient votes in GATT if US permits. Thus evolving US position on OS being followed with deep interest and concern.
Each step that brings OS closer to consummation strengthens position of those who seek immediate commercial advantages for Europeans, rather than eventual European federation. Since there has been no significant change from last year in the fundamental positions of the two sides, there is a real risk that the outcome of any new negotiations would become promise preferential arrangements contrary to American interest in real European integration, and commercially discriminatory against US and less developed countries.
Both Birgfeld and I sense that degree of discrimination which US eventually would suffer in wider European FTA or substitute therefore will be no less than, and perhaps much more than, that which our actions permit vis-à-vis OS.
- Source: Department of State, Central Files, 440.002/9–1059. Secret. Repeated to Luxembourg.↩
- Both telegrams 1844, September 2, and 2046, September 9, indicated that the United States would view a free trade grouping of the “Outer Seven” favorably if it embraced the principles of the GATT. (ibid., 394.41/9–259 and 394.41/9–959, respectively)↩